• search

Equitable Life shows EU single-market problem -lobby

Written by: Staff
|

BRUSSELS, Mar 24 (Reuters) The near-collapse of British insurer Equitable Life and lack of policyholder compensation highlight the difficulty of creating a single market in services across the European Union, an industry group said on Thursday.

A million Equitable Life policyholders, mostly in Britain, with 15,000 in Ireland and Germany, want refunds after the firm came close to failing in 2000.

''We are determined to see justice for present and past policyholders,'' said Tom Lake, chairman of the Equitable Members Action Group (EMAG) set up in August 2000 to defend 18,000 policyholders.

''Justice means both exposition of how this affair came about and compensation for losses,'' he told a European Parliament committee of inquiry into the debacle.

The inquiry, which reports in a year's time after an interim submission in the spring, will look at whether Britain failed to apply EU life insurance directives when deciding whether policyholders had a right to compensation.

Cuts of 35 per cent in incomes from investments have been typical for about 45,000 policyholders, Lake said.

''This affair also throws new light on the attempt to achieve a single market in services. It shows the difficulties put in the way of consumers in the single market, across national legal systems,'' Lake said.

British socialist EU lawmaker Peter Skinner questioned whether policyholders were advised during the stock market boom of the 1990s that markets can go down as well as up.

''Reliance on continuing the bull market for ever and a day was an impossible pipe dream,'' Skinner said.

NO BIG GAPS The European Union is building a single market in financial services to give investors greater choice of products to encourage savings and help tackle the bloc's pensions under-funding problem.

The investigation represents a final attempt by policyholders to obtain redress after disappointment over two British probes, which they say failed to allocate blame.

The European Commission said it could not help.

Elemer Tertak, director of financial institutions at the Commission, told the committee that the EU executive had found no ''major gaps or problems'' in the way Britain introduced EU insurance rules into national law.

Tertak said Brussels had received no complaints about how Britain implemented EU insurance law at the time of the debacle and was not allowed to backdate court action.

He noted, citing former EU Internal Market Commissioner Frits Bolkestein, that the Commission has no direct role in supervising individual insurance undertakings.

''The Commission has seen no reason to bring infringement proceedings (against Britain),'' Tertak said, adding that compensation should be pursued through the national courts and that Britain's Ombudsman offered the best chance of redress.

Lake said all routes to justice in Britain appeared blocked and that policyholders were dying before getting refunds.

Insurance market supervision in Britain during the 1990s was not properly resourced as required under EU law, Lake said.

He said Britain's finance ministry had failed to shoulder its responsibility.

The committee has no funds to offer as compensation.

Equitable's near-demise came when the House of Lords, parliament's upper chamber, overturned the insurer's decision to cut final payouts on some policies. Equitable was forced to set aside 1.5 billion pounds ( BRUSSELS, Mar 24 (Reuters) The near-collapse of British insurer Equitable Life and lack of policyholder compensation highlight the difficulty of creating a single market in services across the European Union, an industry group said on Thursday.

A million Equitable Life policyholders, mostly in Britain, with 15,000 in Ireland and Germany, want refunds after the firm came close to failing in 2000.

''We are determined to see justice for present and past policyholders,'' said Tom Lake, chairman of the Equitable Members Action Group (EMAG) set up in August 2000 to defend 18,000 policyholders.

''Justice means both exposition of how this affair came about and compensation for losses,'' he told a European Parliament committee of inquiry into the debacle.

The inquiry, which reports in a year's time after an interim submission in the spring, will look at whether Britain failed to apply EU life insurance directives when deciding whether policyholders had a right to compensation.

Cuts of 35 per cent in incomes from investments have been typical for about 45,000 policyholders, Lake said.

''This affair also throws new light on the attempt to achieve a single market in services. It shows the difficulties put in the way of consumers in the single market, across national legal systems,'' Lake said.

British socialist EU lawmaker Peter Skinner questioned whether policyholders were advised during the stock market boom of the 1990s that markets can go down as well as up.

''Reliance on continuing the bull market for ever and a day was an impossible pipe dream,'' Skinner said.

NO BIG GAPS The European Union is building a single market in financial services to give investors greater choice of products to encourage savings and help tackle the bloc's pensions under-funding problem.

The investigation represents a final attempt by policyholders to obtain redress after disappointment over two British probes, which they say failed to allocate blame.

The European Commission said it could not help.

Elemer Tertak, director of financial institutions at the Commission, told the committee that the EU executive had found no ''major gaps or problems'' in the way Britain introduced EU insurance rules into national law.

Tertak said Brussels had received no complaints about how Britain implemented EU insurance law at the time of the debacle and was not allowed to backdate court action.

He noted, citing former EU Internal Market Commissioner Frits Bolkestein, that the Commission has no direct role in supervising individual insurance undertakings.

''The Commission has seen no reason to bring infringement proceedings (against Britain),'' Tertak said, adding that compensation should be pursued through the national courts and that Britain's Ombudsman offered the best chance of redress.

Lake said all routes to justice in Britain appeared blocked and that policyholders were dying before getting refunds.

Insurance market supervision in Britain during the 1990s was not properly resourced as required under EU law, Lake said.

He said Britain's finance ministry had failed to shoulder its responsibility.

The committee has no funds to offer as compensation.

Equitable's near-demise came when the House of Lords, parliament's upper chamber, overturned the insurer's decision to cut final payouts on some policies. Equitable was forced to set aside 1.5 billion pounds ($2.6 billion) to cover the liability.

EMAG estimates policyholders lost up to 4 billion pounds in the debacle. Equitable Life's current board has been unsuccessful in taking legal action against the company's former non-executive directors and its accountants Ernst &Young.

REUTERS SD PM1700 .6 billion) to cover the liability.

EMAG estimates policyholders lost up to 4 billion pounds in the debacle. Equitable Life's current board has been unsuccessful in taking legal action against the company's former non-executive directors and its accountants Ernst &Young.

REUTERS SD PM1700

For Daily Alerts

For Breaking News from Oneindia
Get instant news updates throughout the day.

Notification Settings X
Time Settings
Done
Clear Notification X
Do you want to clear all the notifications from your inbox?
Settings X
We use cookies to ensure that we give you the best experience on our website. This includes cookies from third party social media websites and ad networks. Such third party cookies may track your use on Oneindia sites for better rendering. Our partners use cookies to ensure we show you advertising that is relevant to you. If you continue without changing your settings, we'll assume that you are happy to receive all cookies on Oneindia website. However, you can change your cookie settings at any time. Learn more